Blockchain and Cryptocurrency

There has been a lot of noise recently about terms like “bitcoin,” “blockchain,” and “cryptocurrency.” Some of it is hype, but some of it points to important forces in the financial services industry. So what does it all mean?

Blockchain is the technology that enables the existence of cryptocurrency (among other things).

Bitcoin, created in 2009, is the name of the best-known cryptocurrency, is the first decentralized cryptocurrency, the one for which blockchain technology was invented.

A cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange that uses cryptography to secure its transactions, to control the creation of additional units, and to verify the transfer of assets.

Cryptocurrencies are a form of digital currencies, alternative currencies and virtual currencies. Cryptocurrencies use decentralized control as opposed to centralized electronic money and central banking systems. The decentralized control of each cryptocurrency works through a blockchain, which is a public transaction database, functioning as a distributed ledger.

Blockchain also has potential applications far beyond bitcoin and cryptocurrency. Blockchain is, quite simply, a digital, decentralized ledger that keeps a record of all transactions that take place across a peer-to-peer network. The major innovation is that the technology allows market participants to transfer assets across the Internet without the need for a centralized third party.